Value investing had its revenge on Tuesday when top fund managers pitched their best stock ideas at the inaugural investment forum for philanthropic fund manager collective Future Generation.

Even the threat of recession and imminent arrival of Amazon was not enough to suck the oxygen out of the retail sector, with three retail-oriented long positions coming from Eley Griffiths Group’s Ben Griffiths, who warmed to Noni B Limited, Antipodes Partners’ Graham Hay and the US-listed Office Depot, and Neuberger Berman’s Mike Dyer pitching Wholefoods.

The women’s fashion chain was a “real touch and feel retailer”, “a terrific little story and one that is destined to perform in the months ahead,” Mr Griffiths said.

After introducing Office Depot as by all accounts “a dying company in a dying industry”, Mr Hay said the market was valuing the stationery business at just $US2.5 billion versus the $US8 billion valuation it commanded in its failed merger with its biggest competitor. The stock has a single “buy” recommendation and generating US80¢ a share in earnings, it was breathtakingly cheap in his view.

Two-thirds of the company’s sales are already online and “one might argue both Office Depot and Staples are already the Amazon of the office supply industry”.

Wholefoods was said to be on a dual path, Mr Dyer predicted, meaning the company will either fix itself or be taken out and repaired. It is the biggest position in one of Neuberger Berman’s portfolios and the activist Jana Partners is now a co-investor. “It fell into the lovely position of being in a secular growth story without a management team that understood retail 101,” the fund manager said.

Jana saw “pretty much the same thing as us”.

Sandon Capital’s Gabriel Radzyminski was bullish on Mineral Deposits, “one of the cheapest exposures to mineral sands anywhere in the world”.

Mr Radzyminski said replacement cost was far in excess of book value, and book value alone was “over $US272 million”. But the market ascribed it a significantly inferior valuation.

Real surprise

Morphic Asset Management’s Jack Lowenstein presented Japanese apartment builder Haseko Corporation, invoking a comparison with Sydney’s overheated property market.

“Here’s the real surprise. The average price of a two-bedroom apartment in Tokyo now is just half the price of a two-bedroom apartment in Sydney,” he said. The idea that Tokyo is expensive is an outdated prejudice, he argued.

Haseko has no net debt, and a return on equity of 25 per cent. “The reason why it’s so cheap is the Japanese investor is convinced that Tokyo is in the throes of a terrible property bubble,” Mr Lowenstein said. But in an economy where people could borrow at 1 per cent and in a city that was growing, the downside for Haseko was said to be low.

“We think even if they stop growing they’ll still generate a lot of cash,” the fund manager said.

Cooper Investors’ Chris Dixon described his Italian find DiaSorin as “an ATM in a lab”, while Magellan’s Nikki Thomas kept the faith with Apple. One of the more unique presentations was another from Mr Griffiths: ASX-listed car equipment maker PWR Holdings whose systems are used in Formula One and Nascar vehicles. After a “challenging” year, he sees the company benefiting from the bottoming of the British pound and winning more automaker contracts.

Wilson Asset Management chairman Geoff Wilson opened the forum declaring that Afterpay Holdings “could be the new REA”, referring to online property finder REA Group. His chief investment officer, Chris Stott, championed Reckon as “a classic sum of the parts break-up scenario”.

Lanyon Asset Management’s David Prescott still likes PMP Limited.